JULY 2007 BAD FAITH CASES
INSURER CONDUCTED THOROUGH INVESTIGATION AND MADE A REASONABLE FINDING (Philadelphia Federal)

The Court ruled that the insurer had not acted in bad faith. The insureds noticed water penetrated to the interior of their house and believed that it was due to faulty construction. The insureds, three years after the incident, filed a claim under their homeowners’ policy. The insurer denied the claim and the insured filed the instant action alleging breach of contract and bad faith.

The court found that the insurer had not acted in bad faith for several reasons.

First, the insurer, upon receiving notification of the loss, promptly retained an inspector.

Second, the insured’s statement was taken.

Third, the insurer reviewed the insured’s expert report which detailed damage only to the exterior of the house; damage to the exterior was plainly excluded under the faulty construction provision of the insurance policy.

Based on the insurer conducting a thorough investigation and making a reasonable finding, the court granted the insurer’s motion for summary judgment.

Date of Decision: June 15, 2007

Smith v. Westfield Ins. Co., United States District Court for the Eastern District of Pennsylvania, No. 06-3077, 2007 U.S. Dist. LEXIS 43996 (E.D. Pa. 2007) (Robreno, J.)